Omnichannelling in the financial and insurance sector is not an option, rather a non-negotiable necessity that most players in that industry have been developing with varying degrees of success in recent years.
The reason is simple: the omnichannel approach generates a multiplying effect in sales channels. That is, a customer that connects with a financial or insurance company through more than one channel multiplies its revenue potential and its profitability for the company; and develops a higher degree of allegiance to it.
As if the increase in profitability was not enough of a reason to advise such a model, there are other reasons that expose the strength of this vision. One of the most important ones is that the omnichannel model is directly associated with the automation of tasks related to customer interaction, sales development, marketing, logistics, invoicing, payments, etc. In other words, the automation that is required to achieve an omnichannel model generates a virtuous circle of service, cost reduction and agility in customer care.
NTT DATA have recently been involved in the development of a project for a major financial institution in Europe which has successfully completed an omnichannel commercial development process. The project has been executed on clear premises since its inception, with the objective of improving customer engagement and profitability, cost reduction and increasing competitive capabilities in a European banking market that is filled with traditional players’ competition and new, born-in-the-cloud fintechs as well.
The challenge of this project was to find a new customer service solution to manage operations for more than 3 million customers and 1,100 agents, reaching a volume of 160,000 operations and more than 8,000 calls per day.
The first step in the formal development of such a transformation project dealt with the analysis of existing telephony and e-banking solutions, as well as the existing processes in relation to customers and their operations. By implementing this concept as the starting point of the project, it is possible to create an omnichannel customer strategy and a digital architecture that are focused on developing customer engagement, their web and mobile experience, as well as data management and analytics that enable “just-in-time” commercial decisions and actions for the company.
To carry out a project like this, NTT DATA uses the power of Microsoft's Cloud for Financial Services along with its own business accelerators, such as Remote Banking and Omnichannel Engagement.
To be or not to be
The need to increase customer engagement requires a strong customer intelligence capability as a basis for understanding customer behaviour and preferences. This capability also enables improved effectiveness of marketing activities and omnichannel orchestration of the customer experience (Source: Global Retail Banking 2021: The Front-to-Back Digital Retail Bank | BCG).
In parallel, the current effects of COVID-19 have significantly increased the use of digital channels and the demand for online banking services (Source: BCG's Retail Banking Excellence COVID-19 Pulse).
Using omnichanneling as a response to the above challenges makes it easier to offer products and services that are tailored to all types of customers. Starting with the most traditional customers, who still do not feel comfortable using online services for their daily transactions, and all the way through to the digital natives who do not even consider the possibility of waiting in line at the local branch to contract a service, make a deposit or a simple query; and much prefer a digitalised relationship.
From this perspective, there are 3 specific benefits that any organisation would strive to achieve:
1. Reach more customers and increase their individual profitability.
2. Achieve satisfaction of every customer, whatever their digital maturity is.
3. Automation of internal processes and operating costs reduction.
Within the financial sector, and taking the banking business as an example, we can observe different strategies in this respect. E-banks are committed to an omnichannel approach that focuses on the use of digital applications as the main means for developing customer relations, reducing, or directly eliminating any face-to-face dealings with customers and providing a telephone service to complement the online channel at most.
At the other end of the spectrum, we have traditional banks whose focus is still on branch-based services, and whose digital channels are in some cases not mature enough to successfully meet the omnichannel challenge. The keen observer will identify the traditional banks that best relate, attract, and provide service through electronic banking, social networks, or any other type of digital mechanisms in every country. Customers are sovereign, and they are looking for a personalised experience that facilitates their relationship with their financial services provider and that allows them to generate a feeling of belonging. The challenge is, then, to offer a personalised customer experience through the right channels to recommend, engage and help them make better use of all the available services.
The most able organisations tend to cover all channels, giving greater weight to some over others depending on their business strategy, their operational constraints and their own omnichannel management capacity and capability.
What determines the model a financial institution adopts?
Those who believe that innovation is not as important a factor in mature sectors such as finance and insurance are mistaken. Instead, it is difficult to find any other markets where technology is so central to large-scale business operations.
On average, an "efficient" bank has 40% cost savings over a "traditional" bank and needs half the staff to carry out equivalent operations because of their leveraging of technology to automate tasks, making intensive use of available data and information, and their integrating physical and digital channels effectively (Source: BCG's Retail Banking Excellence COVID-19 Pulse).
That said, the financial business is not homogeneous and there are differential factors that determine the evolution of each institution towards more efficient and profitable models.
The first one is the organisation’s culture and the strategic vision stemming from it. Those organisations that have a dynamic, modern, and competitive company culture tend to have a more developed omnichannel vision to the extent that they manage to incorporate it not as a mere means to an end, but rather as a way of doing business in and of itself.
The second factor is having clear objectives. To tackle an omnichannel business model, it is necessary to have ambitious, specific, and measurable objectives. Projects that do not have a well-defined destination usually end up in a mixture of unconnected attempts towards modernisation, automation or transformation that hardly justify the efforts made and, even worse, generate a basis very difficult to build future evolution on.
As a third factor, we can point to the existing commercial management model in organisations. Companies with rigid models of commercial compensation or determination of customer responsibilities and ownership by hermetic departments may experience problems in an omnichannel system: Whose is the customer? Who should work to make the customer become more profitable for the company? And to satisfy him better? And to get him purchase again? And to make him pay on time? Who is responsible for the customer? The omnichannel model challenges the allocation of customers to hermetic sales teams and makes the success or failure of a customer relationship a task that involves very different teams and channels within the organisation.
Continuing with the example of retail banking, we all have had the experience of working with different companies with different ways of engaging with their existing or potential customers. Often, customers perceive that the banks offer digital services that seem to be an evolution of their traditional service models and that they are, to some extent, stuck in their sales models, with very few exceptions that offer an omnichannel model built around the needs and criteria of today's customers.
Those institutions that can build their customer relationship model eliminating the ties of the "how it has been done until now" and are able to put the customer at the centre as a source of profitability and future, will have a greater capacity to compete in a market that has changed. It is enough to recall the large number of new players that have entered this sector offering payment services, mortgages, or investments without being financial institutions per se.
Security is non-negotiable
Customer management and customer relations pose many challenges and, at the same time, many associated benefits. In addition to the previously mentioned focus points, there is a fundamental aspect without which none of the above makes sense: security.
An insecure model in a sector such as the financial market is simply impossible. Then, defining an appropriate project roadmap and having the talent and resources necessary to carry it out over time is an absolute necessity. “Security by design” or data security concepts must be present in any serious transformation project.
The omnichannel model opens new avenues and therefore requires strong awareness of the fact that security is non-negotiable in each of them. The development of internal and external security policies by large and medium-sized organisations necessarily involves the cloud. The most effective and, at the same time, efficient way to consolidate a complex environment to security policy is the use of SaaS services that integrate access processes and regulations for preventing, reacting to and resolving security incidents or problems. This is even more so when dealing with financial institutions or insurance companies.
Customers are at the heart of any financial business, and, at the same time, they are the target of attractive offers, proposals, and benefits from traditional competitors and new "born-in-the-cloud" players.
Customers feel sovereign and empowered to choose, change, and demand. Organisations that are better able to adapt to this reality will have a competitive edge over the rest. The creation of omnichannel customer relationship models allows for having access to intelligent data on customer behaviour, interests, and needs, as well as personalising not only the user experience in their preferred channels, but also the most appropriate product and service offer for each customer in real time.
NTT DATA and Microsoft are committed to the financial and insurance markets in the development and improvement of their omnichannel environments to drive business and customer growth, customer engagement and satisfaction, and optimise the profitability generated by each of them. Find out more in the Cloud Business Applications: A guide to business transformation eBook.